Question

1) On January 4, Year 1, Barber Company purchased 7,500 shares of Convell Company for $84,500 plus a broker's fee of $1,500. Convell Company has a total of 37,500 shares of common stock outstanding and it is presumed the Barber Company will have a significant influence over Convell. During each of the next two years, Convell declared and paid cash dividends of $0.85 per share, and its net income was $97,000 and $92,000 for Year 1 and Year 2, respectively. What is the book value of Barber's investment in Convell at the end of Year 2?

A) $111,050.

B) $86,000.

C) $122,800.

D) $73,250.

E) $123,800.

2) The accountant for Crusoe Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available:

Retained earnings balance at the beginning of the year	$	128,500
Cash dividends declared for the year		48,500
Proceeds from the sale of equipment		83,500
Gain on the sale of equipment		7,500
Cash dividends payable at the beginning of the year		20,500
Cash dividends payable at the end of the year		23,000
Net income for the year		94,500

The amount of cash dividends paid during the year would be:

A) $253,000.

B) $179,000.

C) $46,000.

D) $258,500.

E) $281,000.

3) On February 15, Jewel Company buys 6,500 shares of Marcelo Corp. common stock at $28.68 per share plus a brokerage fee of $475. The stock is classified as long-term available-for-sale securities. This is the company’s first and only investment in available-for-sale securities. On March 15, Marcelo declares a dividend of $1.30 per share payable to stockholders of record on April 15. Jewel received the dividend on April 15 and ultimately sells half of the Marcelo stock on November 17 of the current year for $29.45 per share less a brokerage fee of $325. The journal entry to record the purchase on February 15 is:

A) Debit Long-Term Investments-AFS $186,420; credit Cash $186,420.

B) Debit Long-Term Investments-Trading $186,895; credit Cash $186,895.

C) Debit Long-Term Investments-HTM $191,425; credit cash $191,425.

D )Debit Long-Term Investments-AFS $186,895; credit Cash $186,895.

E) Debit Long-Term Investments-Trading $186,420; credit Cash $186,420.

4) Jeffreys Company reports depreciation expense of $58,000 for Year 2. Also, equipment costing $194,000 was sold for a $11,800 loss in Year 2. The following selected information is available for Jeffreys Company from its comparative balance sheet. Compute the cash received from the sale of the equipment.

At December 31	Year 2			Year 1
Equipment	$	700,000		$	894,000
Accumulated Depreciation-Equipment		500,000			590,000

A) $57,800.

B) $34,200.

C) $78,200.

D) $46,000.

E) $58,000.

5) Use the following information to compute the cost of goods manufactured. Assume that all raw materials used were traceable to specific units of product.

Beginning raw materials	$	6,700
Ending raw materials		5,200
Direct labor		13,450
Raw material purchases		8,600
Depreciation on factory equipment		7,700
Factory repairs and maintenance		4,500
Beginning finished goods inventory		11,400
Ending finished goods inventory		10,100
Beginning work in process inventory		6,900
Ending work in process inventory		7,500

A) $35,750.

B) $35,150.

C) $36,650.

D) $36,350.

E) $42,650.

6) Memphis Company anticipates total sales for April, May, and June of $830,000, $930,000, and $980,000 respectively. Cash sales are normally 30% of total sales. Of the credit sales, 30% are collected in the same month as the sale, 65% are collected during the first month after the sale, and the remaining 5% are collected in the second month. Compute the amount of accounts receivable reported on the company’s budgeted balance sheet for June 30.

$480,200.

$543,900.

$512,750.

$851,950.

$922,950.

7) Landmark Corp. buys $400,000 of Schroeter Company's 7%, 5-year bonds payable at par value on September 1. Interest payments are made semiannually. Landmark plans to hold the bonds for the 5-year life. When the bonds mature, the journal entry to record the proceeds will be:

A) Debit Cash $400,000; credit Interest Receivable $400,000.

B) Debit Cash $400,000; credit Long-Term Investments-HTM $400,000.

C) Debit Cash $400,000; credit Interest Revenue $400,000.

D) Debit Cash $400,000; credit Bonds Payable $400,000.

E) Debit Long-Term Investments-HTM $400,000; credit Cash $400,000.

Answer 1

1)	On Jan 4					84,500
	Add:Brokers fees					1,500
	total cost of investment					86,000
	less:Dividends paid (7500*.85*2)					-12750
	Add:net income (97000+92000)*7500/37500					37800
	book value of investment at end of year 2					111,050
	Answer)
	option A	$111,050
2)	Cash payable at the beginning of the year					20,500
	Add:Cash dividends declared for the year					48,500
	total					69,000
	less:Cash dividend payable at the end of the year					-23,000
	cash dividends paid					46,000
	Answer
	option C	$46,000
3)	cost	(6500*28.68+475)
		186895
	Answer
	option D
	Debit Long term investments -AFS $186,895;credit cash $186,895
4)	cash received from sales
	let depreciation expense on sold equipment be x
	590,000 - x +58000 = 500,000
	x = 590,000+58000-500,000
	x=	148000
	cost of equipment				194,000
	less Accumulated depreciation				-148000
	Book value				46,000
	less:loss on sale				-11,800
	Cash received on sale				34,200
	answer
	option B	$34,200
5)	Beginning raw materials				6,700
	add purchases				8,600
	less ending raw materials				-5,200
	Raw materials consumed					10,100
	Add: direct labor					13,450
	add manufacturing overhead
	depreciation on factory equipment				7,700
	Factory repairs and maintenance				4,500	12,200
	total manufacturing cost					35,750
	Add:Beginning work in process					6,900
	less ending work in process					-7,500
	cost of goods manufactured					35,150
	Answer
	option B	$35,150
6)	Account receivable for June 30
	May	(930,000*70%*5%)=			32550
	June	(980,000*70%*70%)=			480200
	Account receivable for June 30				512750
	answer
	$512,750
7)	answer)	option B
	Debit cash$400,000;credit long term investments -HTM $400,000